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Hearings Shed Light on Pollock Dispute

Years before federal authorities opened their forgery inquiry into a cache of Modernist paintings handled by high-end art dealers, the Knoedler Gallery agreed to refund $2 million to a client who had questioned the authenticity of one of the works, according to court testimony this week.

Two former Knoedler employees testified about the refund for a work attributed to Jackson Pollock during hearings in Manhattan as part of a federal lawsuit brought by a London collector, Pierre Lagrange, who bought another disputed Pollock paintings.

In his suit against Knoedler and Ann Freedman, the gallery’s former president, Mr. Lagrange is demanding back the $17 million he paid in 2007 for that painting, “Untitled 1950.” A forensic examiner for Mr. Lagrange recently declared the work a fake. On Nov. 30, one day after receiving a copy of the forensic report, the 165-year-old gallery closed.

Both disputed Pollocks and approximately 18 other paintings handled by Knoedler came from a Long Island dealer, Glafira Rosales, who is now a target of the federal investigation, according to court records. Ms. Rosales was subpoenaed to testify at this week’s hearings in United States District Court for the Southern District, but invoked her Fifth Amendment right not to incriminate herself. Her lawyer, Steven Kartagener, said, “She maintains she has not done anything wrong.”

The hearings offered new details about the art that is at the center of the investigation. In her testimony Ms. Freedman said that, aside from Mr. Lagrange’s Pollock, Knoedler had sold 15 or 16 paintings supplied by Ms. Rosales that together were valued from $10 million to $20 million. She said that, despite repeatedly questioning Ms. Rosales about the works’ provenance, all she was told was that the paintings were acquired in the 1950s directly from artists like Mark Rothko, Willem de Kooning, Clyfford Still, Franz Kline, Barnett Newman and Robert Motherwell by an unidentified collector in Mexico and secreted away for nearly a half-century. There is no known paperwork verifying the acquisitions.

From the stand, Ms. Freedman said, “I have every reason to believe these works are authentic.” She said she showed them to more than a dozen respected scholars, and none raised questions about authenticity. She dismissed the forensic report, which found two paints on the canvas that were not invented until after Pollock’s death in 1956, saying it was common for manufacturers to give artists experimental pigments to use before they were generally available.

About a decade ago the gallery sold one of the paintings, “Untitled 1949,” to Jack Levy, co-chairman of mergers and acquisitions at Goldman Sachs, for $2 million. Mr. Levy then submitted his painting to the nonprofit International Foundation for Art Research for authentication, but the foundation declined in 2003 to certify it, citing questions about provenance and style. When Mr. Levy demanded his money back, the gallery, then presided over by Ms. Freedman, complied.

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A stake in the returned painting was later sold to David Mirvish, a Canadian theatrical impresario, who wrote to Ms. Freedman at the time that he believed in the work, despite the foundation’s report.

Mr. Mirvish also invested in two other paintings attributed to Pollock that had been supplied by Ms. Rosales, including the one later acquired by Mr. Lagrange for $17 million.

Ms. Freedman testified that she, Mr. Mirvish and Knoedler jointly bought the work for “somewhere over $2 million.” Mr. Lagrange’s lawyer said Knoedler at one point offered to reimburse his client for half of the sale price, suggesting he seek the other half from Mr. Mirvish.

Mr. Mirvish, who brought blockbusters like “The Lion King” and “Les Misérables” to his Toronto theaters, said in a e-mailed statement on Friday: “Based on my experience, Ann Freedman has never sold a work of art that she did not believe to be authentic. If — and I want to emphasize ‘if’ — the Pollock at issue in the Lagrange case is not authentic, Ms. Freedman and I are victims who will be asserting claims against others.”

Other people, including the heiress Joan Tisch and the entertainment mogul David Geffen, considered buying “Untitled 1950” before Mr. Lagrange, Ms. Freedman testified.

In 2009 the work was also offered to the publishing magnate Samuel Irving Newhouse Jr., but he was advised against purchasing it by a leading expert on Pollock, Eugene Victor Thaw. In a sworn affidavit, Mr. Thaw, 84, said, “I advised Si Newhouse against purchasing that painting because I did not believe it to have been painted by Jackson Pollock, nor do I now believe it to have been painted by Pollock.”

But Knoedler’s lawyers challenged Mr. Thaw’s recollection, producing a sworn declaration from another eminent scholar who consulted for Knoedler, E. A. Carmean Jr., saying that when he showed Mr. Thaw the paintings, he said he was unable to draw a conclusive judgment one way or the other.

A version of this article appears in print on December 17, 2011, on Page C1 of the New York edition with the headline: Hearings Shed Light On Pollock Dispute. Order Reprints|Today's Paper|Subscribe